How government support is transforming a key sector of the domestic industry

A Shift in Focus Toward Innovation

Moving away from a raw materials-based economy and building a strong, competitive manufacturing sector — this is the key objective of Kazakhstan’s new era of economic development, in which mechanical engineering is becoming the backbone of the domestic industry. The government has taken an active role in stimulating high levels of investment, focusing on sectors with high labor productivity and export potential that significantly exceed the manufacturing industry’s average indicators.

Support from President Kassym-Jomart Tokayev and the effective implementation of the “roadmap” have taken the industry to a new level. The government has identified key promising sectors: automotive manufacturing, railway engineering, the chemical industry, petrochemicals, replenishing mineral resources, and processing agricultural products.

This strategy is already bearing fruit. According to the Ministry of Industry and Construction, over the first nine months of this year, the main sectors of the manufacturing industry recorded steady positive growth, with a cumulative rate of 6.2%. At the same time, it is precisely the machine-building sector that is the main driver: last year, the manufacturing industry grew by 6%, which was the highest figure in the last decade.

A Leader in Industrialization

The machine-building industry plays a key role in the country’s long-term sustainable GDP growth, creating high added value and contributing to technological development. Over the past five years, the share of machine-building in the manufacturing sector has increased from 13% to 19%.

Reporting at a government meeting on the country’s socio-economic development results, Minister of Industry and Construction Yersayin Nagaspayev stated that due to increased production of vehicles, agricultural machinery, and equipment, output in the machine-building sector rose by 14% over the first nine months of this year.

Impressive growth is being observed in several segments at once: the automotive industry showed a 16.8% increase, and the production of metal products rose by 15.2%. Meanwhile, in the high-tech sector — such as computer, electronics, and optics assembly—investment growth reached 51.8%, and production volume in the electrical engineering sector hit a high of 35.1% over the first four months of 2025.

Billions in investments

The head of state has repeatedly spoken about the importance of providing investment incentives, such as a three-year tax exemption for investors in the manufacturing industry. This policy is already reflected in the figures: in 2024, 282 billion tenge in fixed capital investments were attracted to the machinery sector — more than double the 2023 figure (115 billion tenge). The total planned value of “investment order” projects will exceed 5 trillion tenge. Furthermore, in collaboration with the National Bank, a Program for Investing in High-Tech Sectors of the Economy will be developed with a budget of up to $1 billion, utilizing funds from the National Fund and commercial banks.

The government’s attention and well-thought-out initiatives have made it possible to achieve certain results in a short period of time. The President has set new tasks to unlock the republic’s industrial potential and shift it away from dependence on raw materials toward economic diversification.

According to Meyram Pshembaev, Chairman of the Board of the Association of Kazakhstan Machinery Industry, thanks to support at the highest level, the industry has not only been transformed but has also taken on new dimensions and directions for development.

“Growth in the manufacturing sector has reached its highest level in the past decade,” the association’s head emphasized.

As an industry expert noted during the 12th Forum of Kazakhstan Machinery Manufactures, today our country is focusing on the development of high-value-added manufacturing. Production volume in this sector exceeded mining output by 2.3 trillion tenge (24.5 trillion and 22.2 trillion tenge, respectively) — for the first time since independence.

Currently, the share of Kazakhstan’s machine-building sector in the manufacturing industry has increased to 20%. The sector comprises 37 sub-sectors, including railway, agricultural, oil and gas, mining and metallurgical, automotive, and electrical engineering.

Implementation of the Comprehensive Plan for the Development of the Machinery Industry for 2024–2028, which was developed at the President’s instruction and approved by a government decree, is ongoing.

– The target indicators of the Comprehensive Plan are to ensure a 4.5-fold increase in production volume. It is planned to increase gross value added from 1.3 to 5.9 trillion tenge by 2028, the physical volume index (PVI) by at least 10 percent annually, exports threefold, labor productivity 1.9 times, and investments by 1.5 times, – emphasized Meyram Pshembaev.

Localization and Technology Cluster

The most striking example of success is the domestic auto industry. In 2024, companies in the sector produced 145,290 vehicles. This success is bolstered by the launch of flagship projects, such as the Astana Motors Manufacturing Kazakhstan plant (Almaty) with an annual capacity of 120,000 vehicles and an investment of 202 billion tenge, the KIA Kazakhstan plant (Kostanay) with a full assembly cycle (CKD), as well as the Stadler Kazakhstan enterprise for the production of passenger railcars (Astana) and a plant for the manufacture of freight railcars (Atyrau).

Particular emphasis is placed on localization and the development of related industries. Tangible results have been achieved in this area: the Tengri Tyres tire plant is already operating in Saran, and plants for the production of multimedia systems and car seats have been launched in Almaty. Meanwhile, QazTehna LLP has signed a contract to supply equipment for stamping body parts, and Qarmet JSC plans to begin smelting automotive steel. As part of efforts to increase localization, SaryarkaAvtoProm LLP (Allur) is implementing two major projects to establish localization centers (to be launched in 2026–2027) for the production of plastic parts, mufflers, wiring harnesses, and other components.

These projects will not only reduce imports but also create hundreds of new jobs, strengthening the country’s technological base. The state is ensuring demand for domestic products through legislation: improvements in government procurement should lead to an increase in the Kazakhstani content to a level of at least 60% within three years. Furthermore, the Government is introducing a bill requiring major consumers to approve domestic value development programs.

Kazakhstan’s machine-building industry is undergoing a renaissance and expanding to new scales. Today, more than four thousand manufacturing enterprises operate in the country. Moving away from dependence on raw materials and shifting toward high-tech production is not merely an economic goal, but a national mission.

It is precisely state support that has played a key role in the development and transformation of Kazakhstan’s machine-building industry into a competitive sector of the economy, opening new horizons for future development

The Republic is moving forward, creating a sustainable industrial foundation for long-term growth, proving that economic prosperity is born in factory workshops, not just near oil wells.

Source: kazpravda.kz